You’d think that quarter after quarter of writedowns, bank balance sheets would begin to resemble some kind of reality. Alas, no.
Despite what you hear about mark-to-market forcing the banks to write down assets to ridiculous, nuclear winter levels, the reality is anything but.
A recent report from Goldman Sachs, obtained by Zero Hedge, indicates that the majority of bank holdings are still priced between $.90-$.95 on the dollar.
Citigroup (C) is a particularly egregious offender, notes the Goldman report, though by and large they’re all in lala land. It’s more evidence, as Henry Blodget just noted, that when all is said and done, this new bailout scheme will bankrupt the banks. On the other hand, as John Hempton has argued: This is OK, because at least we’ll now be using an orderly, objective manner to determine bank solvency, rather than an arbitrary one.